Performance-Rating Systems Show Signs of Turning From Tradition

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By Michael Baer

Almost no one in the audience attending the opening session of WorldatWork Total Rewards 2014  Conference in Grapevine, Texas,   raised a hand when asked by a panelist if they were satisfied with their performance-ratings system. Such systems can turn into “institutionalized alienation” of major parts of the workforce, said Brit Wittman, director of executive compensation at Intel Corp.  

Participants in these systems find the process negative and come away with a feeling that the “process is happening to me,” Wittman said. In response, a trend has emerged that does away with ratings systems and instead establishes a system that make the process less negative, he said.

Part of the problem with some of these performance-rating systems is that the worker expects to see certain boxes checked and the rating of “meeting requirements” becomes a major disappointment, said Anne Ruddy, president and chief executive officer of WorldatWork who also participated in the opening session panel. Employers need to think about the current value the person is adding, Ruddy said.

The question then turns to asking how can performance management be done right? The annual review process in general “seems so unnecessary,” said panelist Mike Davis, executive vice president of human resources at General Mills Inc. Wise also said he sees movement away from formal rating of performance. “In a perfect world, we would talk about performance all the time,” he said. The best feedback on performance is “fairly immediate and fairly actionable,” he said.

Nathalie Parent, global voice president of human resources at Hybris, an SAP company, said her organization already has stopped the formal rating process. The setting expectations process creates a report card atmosphere and can limit innovation, especially in a quickly moving business environment where the need to change priorities to fit business needs is necessary, she said.

The panel also discussed employee satisfaction and motivation, engagement, the development and recruitment of talent and the costs and the complexity of administering the new health-care requirements as well as other benefits.